Costs of setting up a new Scottish state: article by Danny Alexander

This week it was revealed that
Alex Salmond has asked his officials to cobble together a report on the costs
of setting up a new Scottish state.

It comes after almost three
weeks of confusion and misinformation from the Scottish government. At one
point the First Minister seemed to pull out a number out of thin air, claiming
that the cost of setting up a new state was around £200
million.

Another time we had to listen to
Salmond’s finance minister John Swinney fail to answer a direct question
on set up costs 13 times during a live radio interview.

That is when they really
descended into farce, making up a hotchpotch of excuses: saying that their
analysis on this issue was “ongoing”, that they were not doing any
more work on it, or that the costs would not be known until after the
referendum.

It is totally implausible that
the Scottish government have done no work on the cost of setting up a new state
– particularly after John Swinney told his cabinet colleagues, in his
secret memo two years ago, that the work was “currently underway in
Finance and OCEA to build a comprehensive overview of the institutions, costs
and staff numbers which I will draw together”.

I suspect any rushed last-minute
exercise is mainly an attempt to distract journalistic attention from seeking
the paperwork the Scottish government are desperate to keep secret until after
polling day.

Alex Salmond has belatedly
recognised his responsibility to provide some real facts in this important
debate. This is just what we in the UK government have been doing for the past
18 months, to help inform voters in Scotland ahead of the
referendum.

While they are finally doing the
work they promised would be done two years ago, it is disappointing that
they’re only doing it because they’ve been found out to be
completely clueless on the matter. I believe there are two reasons why we
should take any of their work on this issue with a big pinch of
salt.

First, because we all know that
previous Scottish government analysis has often been short in real facts, and
rather muddied the waters rather than helped make the situation clearer, we
will need to scrutinise any new findings. In particular:

will it reflect the cost of
setting up a new tax administration system? Independent experts at ICAS have
pointed out that less complex changes than this are costing £750 million
in New Zealand

will it include the cost of
setting up a new welfare and benefits delivery department? According to
research from the Department of Work and Pensions a new welfare and pensions IT
system alone would cost between £300 million and £400
million

will it put a cost on a new
diplomatic network? The European and External Relations Committee last week
called for the Scottish government to give the set up costs of
this

will it include the cost of
producing a new currency?

what about the cost of setting
up a new defence capability?

what about the 180 public bodies
that the Scottish government themselves say (in page 363 of their white paper)
will need to transfer their functions to new or existing bodies in
Scotland?

These are some of the questions
that will need answering. It seems to me that if reorganising Scottish local
government in the mid-1990s cost £281 million, and building the new
Queensferry Crossing cost £1.4 billion, then setting up a whole new state
for less than that doesn’t really sound credible.

The second test we need to apply
is about the Scottish government’s general approach to key questions
regarding the referendum. If it took all this pressure to get them to admit
that they were looking at set-up costs then, what else are they
hiding?

Time and time again they keep
rushing their analysis through, producing flimsy research with little
independent backing. When it suits them they assume the most unrealistic and
optimistic assumptions. As Professor Piachaud of the London School of Economics
explained in an open letter last month: “I am however certain that the
evidence put forward to support the claim that Scotland, as a smaller but
independent nation, could expect to grow faster simply does not stand up to
scrutiny.”

This is why I am still left with
a feeling that you cannot really trust them – they will say anything to
try and stack up their numbers.

Compare that to our approach
– project
fact – providing thorough and detailed analysis of the
relationship between the UK and Scotland.